Tesco is working on an Android smartphone that will be launched by the end of the year.

In September last year the supermarket giant unveiled its own-brand Hudl tablet and has sold 550,000 so far. It is planning a second tablet - Hudl 2 - plus a smartphone and revamped app as it aims to boost its digital retail strategy.

According to the BBC the new smartphone will be an Android device (like the Hudl) and have specs 'comparable' to Samsung's Galaxy S5.

In an interview with the BBC, the chief executive of the supermarket giant Philip Clarke said: "The opportunity in multi-channel online retail is what has lead us to develop the Hudl tablet. We've sold 550,000, Hudl 2 is coming out in September and then there's going to be a Hudl phone by the end of the year, all are going to come loaded with Tesco services."

Tesco seems to be following the same playbook as Amazon has with its Kindle devices – using reasonably-priced hardware as a way to lock customers into its shopping and media ecosystem (Amazon is also heavily rumoured to be working on a smartphone for launch sometime soon).

The Hudl, as well as allowing access to the Google Play store, is a gateway to Tesco's online services, and features a 'launcher' button which takes users directly to Tesco's digital services, including blinkbox movies and TV, music and Clubcard TV, banking, and shopping for groceries.

Clarke – previously the retailer's IT chief – also said that later this year a Tesco app would allow customer to scan goods and pay with their phone. But for all these innovations online grocery sales remains a small part of the overall market – Clarke said that in 15 years online retail might hit 15 percent in the UK.